LANSING, Mich.—Legislation to increase payments in lieu of taxes (PILT) and swamp taxes to local governments for state-owned land within their boundaries was approved Thursday by the Senate Natural Resources, Environment and Great Lakes Committee.
Senate Bills 1021 and 1022, sponsored by Sens. Tom Casperson and Darwin Booher, aim to address repetitive problems with PILT payments not being paid on time or in full.
The Michigan Department of Natural Resources (DNR) owns approximately 4.6 million acres of land, with the vast majority in the Northern Lower Peninsula or Upper Peninsula. In addition, the federal government owns around 3.1 million acres, meaning that 20 percent of Michigan’s land base has been taken off the tax rolls, and PILT or swamp taxes are paid instead. Local services are negatively impacted because the payments to locals are significantly less than what would be paid by a private owner.
“PILT payments are supposed to be made by the state on land it owns, but the state has been late or making reduced payments for several years now,” said Casperson, R-Escanaba. “With more than two million acres of state-owned land in the Upper Peninsula, this makes the PILT payments extremely important to our communities. This legislation would help get local units of government their fair share of revenue, and also force state officials to understand the true cost of purchasing more and more public land.”
The Senate bills would make the following changes to PILT and swamp taxes:
• Increase swamp tax payments from $2 to $5, with one dollar designated for recreation improvements, and provide for an annual inflationary increase;
• Increase PILT payments for purchased lands by ensuring payments are based on current taxable values and current millage rates; special assessments would also be paid;
• Require the state to make payment by Feb. 14 to locals that have submitted their information as required by law;
• Insert a penalty on the state for not paying payments on time for purchased lands; the penalty would be the same that taxpayers face if they do not pay property taxes; and
• Insert a 5 percent per month penalty for locals that do not submit their statements, beginning Feb. 1.
“It is time for the state to meet its obligations on the land that it owns,” said Booher, R-Evart. “Michigan residents are not allowed to only pay part of their tax bills and continue to own their land as evidenced by the fact that much of the land DNR currently owns came into state ownership years ago when people could not afford to pay their taxes on it. Most disconcerting to me is that the state has not been living up to its obligations to our communities yet continues to buy more land.”
Casperson said: “While some state land is considered a valuable asset for the people of Michigan when the land is fully open for use and enjoyment, people who live down state must realize that the public land comes with a cost to the communities surrounding that land. The bills will simply provide long overdue and fair compensation from the state on property owned by the state.”
The bills now head to the full Senate for consideration.